Let’s Have Post Office Banking!

The present system has failed the poor and those living paycheck to paycheck (often the same group). Millions of people pay exorbitant fees for cashing checks and short term loans for family emergencies. We can end that right now by using the Post Office as a bank.

Why is this an issue for me, business ethics writer? It’s very simple. The conflict here is between human intelligence and neo-liberalism. For the neo-liberal, it is obvious that the free market is always better than anything else. For me, evidence should be used to decided what works and what options society should choose to solve its problems. The current banking system and payday loan industry have failed and failed spectacularly in taking care of the needs of a great part of our people.

If there is anything I write about consistently, it is the need to use intelligent, reasoned decision making. Doctrinal rules like the idea that the free market is always best are better used in the world of religion.

Your friendly local post office may have an honorable history, but it’s facing tough times, including a fiscal crisis and, more generally, a struggle to keep pace with growing digital communication technologies. Conservatives have increasingly dismissed the United States Postal Service as a clunky relic of old-fashioned America, with right-wing lawmakers seeking to phase it out through service cuts and privatization. Now, some progressives are trying to save the USPS by rebranding it as a financial vehicle: a place for you to pick up your mail and deposit a paycheck in one stop.

Some officials have pitched the idea of the postal service expanding into “non-bank” financial services, carefully designed to complement rather than directly compete with Wall Street. In a recent white paper, the USPS Inspector General’s office suggested that local post offices could offer products such as international money transfers, small short-term loans, and prepaid debit cards for bills or everyday purchases. To fulfill needs unmet by big banks, these financial services would ideally be targeted toward “low-income areas like rural communities and inner cities.”

Ultimately, though, many advocates want to see the postal service be bolder and actually delve into full-scale banking services. Labor and consumer advocacy groups like AppleSeed say the USPS is excellently positioned as a government-supported, publicly accountable institution to fill a longstanding gap in the financial system by offering interest-bearing accounts and other basic banking services. In addition, branching into the affordable finance business would offer the USPS a steady revenue stream.

For free-marketers who fear the USPS would steal big banks’ customers, advocates point out that low-income groups that stand to gain the most from postal banking have already been marginalized as a bad business prospect. Some 68 million Americans are considered “underbanked”: In other words, they lack access to mainstream banks and essential services like savings accounts. “Banking desert” neighborhoods are typically full of people of color, immigrants and unemployed workers — and there may be no full-service bank in sight for them, because massive firms like Merrill Lynch do not see those areas as “profitable.”

From around the web.

USPS is one of the most trusted organizations in the United States. Its reputation and world-class services are well known, and its customers know that there is no better value for their shipping solutions than their local Post Office. Reintegrating banking services into the Postal Service could have the effect of increasing its revenue base from financial services while simultaneously expanding its mailing business from increased foot traffic in its local branches.

The endeavor wouldn’t be a quick solution to increasing postal revenue as there are many infrastructure enhancements and procedures to establish to ensure necessary financial rules and regulations are followed. Still, the long-term prospects of a renewed Postal Savings System could be lucrative enough to reestablish the once thriving service.